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I haven't looked into this much, but I read in some article yesterday, that they're trying to establish these generative AI features as a selling point for Windows. In the article, there was a 10 second ad video for Recall linked, too.
And I imagine, this was somewhat of a hyperbole, but the article author claimed that Recall was the only of these generative AI feature ideas that was any good, but then torpedoed by the privacy issues.
So, yeah, that might be all there is to it. They want to shoehorn AI into there somehow, to make shareholder hype/value go up, and that was just the only real idea they had.